Island region's leaders concerned over new economic woes

Every December, leaders from the Caribbean gather in Miami to talk business and economic policy, meeting with counterparts from the United States, Europe and Asia.

But this year, instead of a joyous 25th anniversary, participants attending the Miami Conference on the Caribbean and Latin America are anxious, facing what some describe as the worst crisis facing the island region since world oil prices soared in the 1970s.

Nearly every industry in the region is reeling. Tourism, the biggest, has plunged because of a worldwide economic slump and fears of flying after the Sept. 11 terrorist attacks. Manufacturing is down because of weak U.S. demand and rising competition from China and other lower-wage countries. And even the flow of money sent back from immigrants abroad -- at least $1.5 billion a year to the Dominican Republic alone -- is slowing, as job losses mount in the United States.

Policymakers in Washington also have turned attention away from the Caribbean Basin region, as they focus instead on the war against terrorism in the Afghanistan area.

"There's almost hunger in the region for closer relationships (with Washington), but I don't see the administration responding," said Donald Planty, a former U.S. ambassador in Guatemala and outgoing chief at Caribbean/Latin American Action, organizers of the annual Miami Conference.

Since Sept. 11, the World Bank has knocked 2 percentage points off growth estimates for the Caribbean's economy for 2001 and 2002, as many nations slide into recession. The bank expects a 20 percent to 25 percent drop in tourism through 2002 compared with 2000, a devastating blow to the most tourism-dependent region in the world.

Tourism now accounts for about one-fourth of the Caribbean's economic output and as much as 50 percent to 60 percent in some nations. Plus, it's a key source of jobs. Tourism layoffs have pushed unemployment likely beyond 20 percent, prompting worries of rising crime.

"Keeping the social cohesion in these countries is a major challenge," said Orsalia Kalantzopoulos, who runs the Caribbean department for the World Bank in Washington, D.C.

To help provide jobs, the World Bank and other banks are speeding up loans to build schools, bridges and other public works projects. They're also helping provide cash, so islands can get technical help to beef up security at airports to boost confidence of U.S. travelers, said Kalantzopoulos.

Yet tough times are forecast at least through 2002, economists warn.

Not all nations or businesses in the fragmented and diverse Caribbean are suffering equally, however.

In tourism, destinations that depend largely on U.S. travelers, such as the Bahamas and the U.S. Virgin Islands, are hardest hit. Those with a mix of U.S and European or South American guests, such as Barbados and Aruba, are hurting less, said the Caribbean Hotel Association.